This website uses cookies to collect usage information in order to offer a better browsing experience. By browsing this site or by clicking on the "ACCEPT COOKIES" button you accept our Cookie Policy.

Omicron Variant Creates Near-term Uncertainty

Last Wednesday’s Fed minutes release suggesting a stepped up tapering schedule combined with uncertainty over the impact of the Omicron virus variant created a mini panic by investors. While the pullbacks created some damage to major indexes, we continue to believe the longer-term outlook for stocks remains positive. Near-term however, we expect markets to remain mixed and vulnerable to any significant negative news surrounding the impacts of the Omicron variant

  • The Russell 2000 is breaking down and is near 52-week RS lows vs. the S&P 500. IWM is near a support level near Friday’s low near the 220 level. A break back above the 234.50 level would provide for a bullish outlook
  • S&P 500. The S&P 500 has support at Friday’s low of 4585 and the breakout level near 4545. We believe the markets will remain mixed until concerns of the Omicron mutation can be ascertained.
  • Treasury bonds. 10-year Treasury yields remain above the 1.4% support level and 30-year remains above support at 1.76%. As long as the following support levels hold, we believe that a positive backdrop for the markets exists. We believe the pullback in banks and thrifts also remains constructive.
  • Crude Oil. Despite last week’s dramatic decline, crude oil prices remain above the 200-day moving average at 69.77 and may provide for a good entry. Historically the opening of the SPR is a short-term solution to a much larger problem. The sudden decline in oil prices are likely due to concern over the impact of the Omicron virus is likely to have on travel .
  • Defensives continue to underperform. XLP (Cons Staples) vs XLY (Cons. Cylicals) remains near multi-year lows. XLU (Utilities) remain near RS lows vs the S&P 500…
Russell 2000


Disclosure: Vermilion Research

The information contained herein is privileged, confidential and protected from disclosure. Any unauthorized disclosure distribution, dissemination or copying of this material or any attachment is strictly prohibited; such information, whether derived from Vermilion Vermilion Capital Management, LLC or from any oral or written communication by way of opinion, advice, or otherwise with a principal of the company is not warranted in any manner whatsoever, is for the use of our customers only and may be obtained from internal and external research sources considered to be reliable. It is not necessarily complete and its accuracy is not guaranteed by Vermilion Capital Management, LLC, its operating entity or the principals therein. Neither the information nor any opinion expressed constitutes a solicitation for the purchase of any future or security referred to in Vermilion research publications. Principals of Vermilion Capital Management, LLC may or may not hold, or be short of, securities discussed herein, or of any other securities, at any time. The foregoing also expressly applies to any trial subscription.

Disclosure: Interactive Brokers

Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from Vermilion Research and is being posted with permission from Vermilion Research . The views expressed in this material are solely those of the author and/or Vermilion Research and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

In accordance with EU regulation: The statements in this document shall not be considered as an objective or independent explanation of the matters. Please note that this document (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and (b) is not subject to any prohibition on dealing ahead of the dissemination or publication of investment research.

Any trading symbols displayed are for illustrative purposes only and are not intended to portray recommendations.

trading top